England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		08/05/2009

Mr Justice Holroyde :

1. This is a Part 8 claim by which the Claimant ("Mr Brewer") seeks to invoke the inherent jurisdiction of the Court to quash parts of a decision made by Costs Judge Master Campbell on the 22^nd July 2008. It is linked to an appeal pursuant to reg 11 of the Costs in Criminal Cases (General) Regulations 1986 as amended brought by Mr Brewer against the Secretary of State for Justice, which also relates to the decision of Master Campbell. I have also heard that appeal, taking the view that the two matters should not be heard together but should be heard one after the other, and have given a separate judgment in relation to it. The Secretary of State (Respondent to that appeal) is not a party to this claim, but is at least informally interested in it.
2. It is necessary to begin by summarising as briefly as possible the long and somewhat complicated history which is relevant to both sets of proceedings.
3. On the 29^th April 2001 Mr Brewer was served by the Serious Fraud Office, which was investigating suspected offences of dishonesty involving very large sums of money, with a notice pursuant to Criminal Justice Act 1987 s2 requiring him to produce documents. The matters with which the investigation was concerned included events in the USA, in relation to which there had been relevant civil proceedings in that country. Mr Brewer immediately contacted Miss Mercedes Travis, an American attorney who had acted for him in the proceedings in the USA and who was therefore very well acquainted with relevant matters there. She on his behalf contacted leading counsel in this country, and thereafter solicitors in London, Russell Jones & Walker ("RJW").
4. On the 1^st May 2001 Mr Brewer entered into an agreement with Miss Travis whereby he engaged her to act on his behalf with regard to all matters relating to the notice issued against him by the SFO, and any subsequent actions which may result from it. Under the terms of this engagement, Miss Travis agreed –

"… to work with you, your solicitors and should the same become necessary, your barristers in all regards in your defence including case preparation, attendance at conferences, evidence evaluations and review, research and other matters as required; I shall spend such time as is necessary to complete these duties; and, in the event it should become necessary, I shall perform such services through and including any ultimate trial or appeal that may result from the Notice."

5. The fees payable to Miss Travis under that agreement were a flat fee of £15,000 per month, plus her out of pocket expenses. The fees (though not the expenses) were capped at £275,000, and in the event Miss Travis billed a total of £270,000 for her fees.
6. On the following day, 2^nd May 2001, RJW agreed to act for Mr Brewer.
7. Mr Brewer was arrested in September 2001, and charged a year later in September 2002 – about 18 months after RJW and Miss Travis had each begun to work on the case. Within a few days of his being charged, a representation order was granted which covered the work of RJW, leading counsel and junior counsel. The work done by the English lawyers prior to that date was charged to Mr Brewer privately. For convenience, albeit imprecisely, I shall refer to the period prior to the granting of the representation order on 24.09.02 as "pre-certificate", and the period thereafter as "post-certificate".
8. On the 2^nd November 2002 Mr Brewer married Miss Travis. For convenience, and following the course taken by counsel in their submissions to me, I will continue to refer to her in this judgment as "Miss Travis".
9. On the 8^th September 2003 the trial began against 5 defendants (including Mr Brewer, who was not first on the indictment), on charges alleging money laundering in relation to a sum of US $11.5 million. On the 19^th December 2003 the trial was stopped by the trial judge, HH Judge Fingret, and all defendants were acquitted.
10. Counsel for the first defendant made a very brief application for a defendant's costs order, offering to develop the application if the judge required. HH Judge Fingret indicated that a detailed application was unnecessary, saying "No, that will be the normal consequence", and made "a defendant's costs order to be taxed". Counsel for Mr Brewer then said –

"Your Honour, I too have a similar application, both in respect of Mr Brewer's out-of-pocket expenses after the grant of legal aid and also to cover a period of time prior to the grant of legal aid where other expenses were incurred".

11. The judge replied: "I make a similar order in respect of that". Counsel for each of the remaining Defendants then asked for, and were granted, "the same".
12. RJW and counsel submitted their bills and fee notes, and their fees for both pre-certificate and post-certificate work were taxed and paid by the Determining Officer. It is relevant to note that RJW's fees for all their work during both periods, including disbursements, amounted in the aggregate to £258,542.
13. On the 1^st March 2004 Mr Brewer submitted his own claim for reimbursement of his expenses. For matters personal to himself he claimed a total of £54,897.37, comprising £17,241.86 for travel; £35,166.60 for copying; £1,403.94 for telephone calls; and £1,084.97 for sundries.
14. In addition to that claim in respect of personal expenses, Mr Brewer claimed reimbursement of fees and expenses which he had paid to Miss Travis in the total sum of £311,471.41.
15. On the 19^th July 2004 the Determining Officer allowed Mr Brewer the total sum of £18,339.65, one-third of what had been claimed in respect of the personal expenses summarised in paragraph 13 above. He did not allow any sum in respect of the claim relating to payments to Miss Travis.
16. Mr Brewer applied for a redetermination pursuant to reg 9 of the Regulations, and on the 18^th April 2005 the Determining Officer allowed a further £1,272.15 in respect of the personal expenses. He still did not allow any sum in respect of payments to Miss Travis. In response to a request from Mr Brewer, he gave written reasons on the 22^nd June 2005.
17. By reg 10 of the Regulations, an appeal lay from that decision on redetermination to a Costs Judge. Mr Brewer gave notice of such an appeal, and on the 12^th September 2005 it was heard by Costs Judge Master Rogers. He came to the conclusion that

"a small sum should be allowed to Mr Brewer in respect of, essentially, pre-prosecution work in which Mr Brewer's case with RJW was materially assisted by the encyclopaedic knowledge of the case which Miss Travis was able to provide to them".

He assessed that sum at £25,000.

18. On the 29^th September 2005 Master Rogers gave written reasons for his decision. He was asked by Mr Brewer to certify points of principle of general importance pursuant to reg 11 of the Regulations, but declined to do so.
19. In the absence of any certified points of principle of general importance, Mr Brewer had no further avenue of appeal under the Regulations. However, he brought proceedings in the Divisional Court – R (Brewer) v Supreme Court Costs Office [2007] 1 Costs LR 20; [2006] EWHC Civ 1955 (Admin) - in which he successfully invoked the inherent jurisdiction of the High Court. That jurisdiction, recognised in the earlier case of R v Supreme Court Taxing Office ex parte John Singh & Co [1997] 1 Costs LR 49, is to be exercised sparingly to cure "a real injustice". The Divisional Court held that Master Rogers, having accepted the claim in relation to Miss Travis' fees in principle, should have (but had not) carried out a detailed investigation of what work she had done and whether it had been reasonably done in the circumstances of the criminal case. Maurice Kay LJ said, at para 27, that in his judgment –

"… there was a 'real injustice' in proceeding to assess the sum reflecting the input of Miss Travis without undertaking a detailed assessment of the work she had done".

20. The court therefore quashed the determination made by Master Rogers on the 29^th September 2005, quashed his decision refusing to certify a point of principle of general importance, and remitted the appeal to the Senior Costs Judge for further directions. Maurice Kay LJ, with whom Mitting J agreed, also made certain observations about the history of the case, and about the problems caused by the fact that RJW's claim and Mr Brewer's claim were submitted and considered separately: I respectfully agree with those observations, to which I refer more fully in my judgment in relation to the statutory appeal.
21. That ruling of the Divisional Court was given on the 27^th July 2006. The Senior Costs Judge subsequently gave directions assigning the matter to another Costs Judge so that the assessment of the sums payable to Mr Brewer could be revisited. So it was that the matter came to Master Campbell.
22. On the 8^th December 2006 Master Campbell gave directions. He required various papers to be submitted to him by Mr Brewer, and that was duly done. Master Campbell considered the papers, and on the 29^th May 2007 he gave a written decision.
23. Most unfortunately, there had been a misunderstanding or error as to whether a further oral hearing should take place before Master Campbell made his decision. A date for such an oral hearing had been identified when directions were given on the 8^th December 2006, but that date came and went without any hearing having taken place. It appears that regrettably the date had not been confirmed to Mr Brewer or to his solicitors, with the result that they were waiting to hear from the court as to a new date, whilst Master Campbell proceeded in the belief that Mr Brewer and his advisers knew of the hearing date but did not wish to add oral submissions to their written submissions. This unhappy situation became apparent, of course, when Master Campbell's written decision was received by Mr Brewer and his solicitors.
24. On the 28^th June 2007 Mr Brewer asked Master Campbell to certify certain points of principle, including a point relating to the fact that he had made his decision without having heard oral submissions. On the 31^st July 2007, Master Campbell recalled his decision of the 29^th May. On the 26^th September 2007 he conducted a hearing at which counsel then instructed on behalf of Mr Brewer was asked to consider 3 possible routes forward: a rehearing before Master Campbell; a rehearing before a different Costs Judge; or a request for Master Campbell to certify points of principle. On the 27^th February 2008 Mr Brewer asked for the third of those courses to be adopted.
25. On the 22^nd July 2008 Master Campbell reissued the decision which had initially been given on the 29^th May 2007 but had then been recalled. He held in relation to the pre-certificate period that it would be inappropriate to allow Mr Brewer to recover costs on the flat-fee basis of £15,000 per month which Miss Travis had charged, without reference to the work actually done during each month. He therefore determined what seemed to him an appropriate notional hourly rate for a lawyer of Miss Travis' experience and standing (bearing in mind that she was not then qualified as a solicitor in this country, though she is now), and then made an assessment of the work which he found to have been actually and reasonably done by her. By that process Master Campbell arrived at a total figure of £20,700, and awarded Mr Brewer that sum from Central Funds.
26. In relation to the post-certificate period, however, he held that Mr Brewer could not recover the fees and expenses he had paid to Miss Travis. He gave his reasons for that decision, and subsequently certified two points of principle of general importance: these are the subject of the statutory appeal. For the reasons set out in my judgment therein, I have allowed that appeal and set aside the decision of Master Campbell in paragraphs 102 – 116 of his Reasons for Decision. I have also remitted the appeal to the Senior Costs Judge with a view to a fresh determination being made by him or another Costs Judge of the costs payable to Mr Brewer pursuant to the defendant's costs order granted to him by HH Judge Fingret on the 19^th December 2003. I do not think it necessary in this judgment to go into further detail about my judgment in the statutory appeal, save to say that in paragraph 49 thereof I made some observations of general application, which I hope may be helpful to determining officers in a case which involves a claim by a successful defendant for reimbursement from central funds of expenses incurred by him in relation to legal professional services during a period when a representation order was in force.
27. The two points of principle of general importance which Master Campbell certified did not include any point in relation to the fact that he had not conducted any hearing before making his decision. Both related to the assessment of costs in respect of the post-certificate period. The statutory right of appeal under reg 11 of the 1986 Regulations is limited to the decision which is the subject of the certified points: Mr Brewer accordingly had no statutory right of appeal in relation to his costs during the pre-certificate period.
28. Mr Brewer therefore issued this Part 8 claim on the 15^th October 2008. In his Details of Claim he summarised the history of the matter, pointed to the fact that he is unable to pursue a statutory appeal to the High Court in relation to "the absence of hearing points", and contended that the decision of Master Campbell in that regard should be quashed as otherwise he would suffer a real injustice. He gave Particulars, the essence of which was that he had not had an opportunity to be heard on numerous important points which Master Campbell had decided against him. He further contended that, in choosing to take the third of the three possible courses mentioned in paragraph 24 above, he had not intended to abandon either his claim to recover the expense of Miss Travis' fees during the pre-certificate period, or his claim for the costs of proceedings subsequent to the decision of the Divisional Court. In short, Mr Brewer's complaint was that he had been deprived of a hearing to which he was entitled.
29. On the 30^th October 2008 the SCCO acknowledged service of this claim and indicated that it would not be resisted. The SCCO accepts that because of the administrative error to which I have referred, Mr Brewer has suffered a breach of natural justice such as to justify the exercise by this Court of its inherent jurisdiction.
30. Given that the claim is not resisted, and given the agreement between the parties as to why the decision of Master Campbell should be quashed, I do not think it necessary for me to deal in any detail with the legislative provisions underlying the proceedings to date. I must however say a little about that, and about the jurisdiction of this Court which I am exercising in this claim.
31. The power of the Crown Court to make, in favour of a person acquitted after trial on indictment, an order for a payment to be made out of central funds in respect of his costs (a "defendant's costs order") is contained in s16(1) and (2) of the Prosecution of Offences Act 1985 ("the 1985 Act").
32. By s16(6) of the 1985 Act –

"A defendant's costs order shall, subject to the following provisions of this section, be for the payment out of central funds, to the person in whose favour the order is made, of such amount as the court considers reasonably sufficient to compensate him for any expenses properly incurred by him in the proceedings".

33. By s16(7) –

"Where a court makes a defendant's costs order but is of the opinion that there are circumstances which make it inappropriate that the person in whose favour the order is made should recover the full amount mentioned in subsection (6) above, the court shall -"

(a) assess what amount would, in its opinion, be just and reasonable; and

(b) specify that amount in the order".

34. By s16(9) –

"Subject to subsection (7) above, the amount to be paid out of central funds in pursuance of a defendant's costs order shall –

a) be specified in the order, in any case where the court considers it appropriate for the amount to be so specified and the person in whose favour the award is made agrees the amount; and

b) in any other case, be determined in accordance with the regulations made by the Lord Chancellor for the purposes of this section."

35. The relevant regulations are of course the 1986 Regulations to which I have already referred in this judgment. Reg 7 of those Regulations must be quoted in full:

"(1) The appropriate authority shall consider the claim, any further particulars, information or documents submitted by the applicant under reg 6, and shall allow such costs in respect of –

a) such work as appears to it to have been actually and reasonably done; and

b) such disbursements as appear to it to have been actually and reasonably incurred,

as it considers reasonably sufficient to compensate the applicant for any expenses properly incurred by him in the proceedings.

(2) In determining costs under paragraph (1) the appropriate authority shall take into account all the relevant circumstances of the case including the nature, importance, complexity or difficulty of the work and time involved.

(3) When determining costs for the purposes of this regulation, there shall be allowed a reasonable amount in respect of all costs reasonably incurred and any doubts which the appropriate authority may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved against the applicant".

36. It is I think clear from a reading of those provisions that Mr Brewer had good reason to wish to exercise his right to make oral submissions to Master Campbell, in order to set out as clearly as possible the matters which he contended should lead to reimbursement of the fees and expenses he had paid to Miss Travis. Master Campbell had to make an assessment of what work had actually and reasonably been done by Miss Travis over a period of about 18 months, and Mr Brewer wanted to be able to make oral as well as written submissions about the details of that work and the mass of relevant documentation. He also wanted, in view of reg 7(3) of the Regulations, to have an opportunity to answer any doubts Master Campbell might express as to whether particular costs were reasonably incurred or reasonable in amount, since otherwise Master Campbell would be obliged to resolve those doubts against him.
37. So far as this claim is concerned, Mr Brewer relies on the jurisdiction, referred to in paragraph 19 above, which was recognised by the Divisional Court in R (Brewer) v Supreme Court Costs Office and in the earlier case of R v Supreme Court Taxing Office ex parte John Singh & Co. Both those cases emphasised that it is a jurisdiction which can rarely be invoked, and which will only be exercised where there would otherwise be "a real injustice". I am conscious that it is on the face of it remarkable that the same litigant, Mr Brewer, could be able successfully to invoke it twice at different stages of the same protracted proceedings. Nonetheless, it seems to me that the parties are correct in their joint recognition that there would here be "a real injustice" if Master Campbell's decision were not quashed. Mr Brewer would in that event be left without any remedy for a situation in which he was deprived of a hearing to which he was entitled, and at which he could legitimately have hoped that oral submissions would have led to a more favourable decision. In Mr Brewer's earlier application to the Divisional Court, Maurice Kay LJ at paragraph 26 indicated that the problem in that case had arisen because the claims separately submitted by RJW and by Mr Brewer had been allowed to remain separate, and added –

"This should not have happened. It is not the fault of the claimant that it did."

In the same way, it seems to me, the problem here has arisen because of an administrative error which should not have happened and which was not the fault of Mr Brewer.

38. The fact that I have allowed the statutory appeal in relation to other parts of the decision of Master Campbell is a further reason for concluding that there would be a real injustice if I did not here exercise the inherent jurisdiction of the Court.
39. The fact that Mr Brewer was offered the options of a hearing before either Master Campbell or another Costs Judge (see paragraph 24 above) is in itself a recognition that the absence of any hearing before Master Campbell reached his decision was a breach of natural justice. I have considered whether the availability of those options should lead me to conclude that the present claim was not necessary, and that the Court is being asked to exercise its inherent jurisdiction in circumstances where the "real injustice" could have been avoided by taking one of those options. However, Mr Brewer's position was complicated by the availability of the statutory appeal on grounds relating to the certified points of principle of general importance, and I have concluded in my judgment in the statutory appeal that he did not act unreasonably in pursuing that appeal. Mr Brewer was in my view correctly advised that this claim should specifically exclude those parts of Master Campbell's decision which could be remedied by that appeal. My conclusion is that it would not be right to decline to exercise the inherent jurisdiction simply because Mr Brewer has proceeded in the way I have indicated.
40. In those circumstances I accept that this is a proper case to exercise the inherent jurisdiction of this Court so as to quash the relevant parts of Master Campbell's decision and remit Mr Brewer's claim in relation to the fees and expenses paid to Miss Travis to be considered afresh by a different Costs Judge. I do not think it right to accede to the submission that the Senior Costs Judge must himself conduct that fresh assessment: it shall be done by him or by another Costs Judge chosen by him. It will be a matter entirely for the Costs Judge who is so selected to determine the application in accordance with the statute and the Regulations. I respectfully repeat and adopt another passage from the judgment of Maurice Kay LJ in R (Brewer) v Supreme Court Costs Office:

"I express no view whatsoever on what a proper reassessment may yield. I am certainly not suggesting that it is likely to yield a sum approaching the one claimed".

41. My order is –

i) That save for paragraphs 102 – 116 thereof, the redetermination by Master Campbell on the 22^nd July 2008 of the Claimant's claim for reimbursement of expenses out of central funds be quashed, pursuant to the inherent jurisdiction of the Court;

ii) That the claim for such reimbursement be remitted to the Senior Costs Judge for him –

a) to nominate either himself or another Costs Judge to determine afresh the costs payable to Mr Brewer pursuant to the defendant's costs order granted to him by HH Judge Fingret on 19.12.03;

b) to give notice of such fresh determination to the Lord Chancellor, so that the Lord Chancellor may arrange for written or oral representations to be made on his behalf; and

c) to give any further directions he considers necessary for the hearing of that determination.

42. Mr Brewer is entitled to the costs of this claim, and I take the view that in principle his costs of the earlier stages of this matter will fall to be considered and determined by the Costs Judge who is appointed to conduct the fresh determination. As was contemplated at the conclusion of the hearing, I await the further submissions of counsel, in the light of this judgment and of my order, as to the form of the order for costs and as to the summary assessment thereof.